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Negative Revaluation Reserve on PPE

DawnyDawny Settling In NicelyMAAT, AAT Licensed Accountant Posts: 60
I have just taken over the accounts of a small company and there is a negative revaluation reserve from a historical revaluation on the companies tangible fixed assets.

Should I take this to the P&L as impairment in this year's accounts?

Thanks in advance.

Best Answer

Answers

  • DawnyDawny Settling In Nicely MAAT, AAT Licensed Accountant Posts: 60
    Thank you.
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Has the loss been realised? (ie. has the asset been disposed of or reached the end of its economic life?)
  • DawnyDawny Settling In Nicely MAAT, AAT Licensed Accountant Posts: 60
    The assets were various pieces of equipment which had no value left. But no other loss had been put through the books.
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    My understanding is that the revaluation reserve is transferred to the P&L as the loss is realised, so with tangible fixed assets this is normally in line with depreciation or when the asset is disposed of so if the asset is fully depreciated then you should write the reserve off to the P&L accordingly. But I stand to be corrected!
  • DawnyDawny Settling In Nicely MAAT, AAT Licensed Accountant Posts: 60
    Yes, this is my understanding too, but I needed someone to confirm it for me so thank you!
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